Wipro quarterly profit rises 9 pct to $185 million

MUMBAI, India 
Software services provider Wipro Ltd. said quarterly net profit rose 9 percent from a year earlier, but warned revenue from its mainstay business is set to fall as customers halt expansion plans amid the global downturn.

Net income for the October-December quarter was 8.98 billion rupees ($185 million), Wipro said Wednesday. Revenue rose 25 percent to $1.35 billion, less than analysts had expected. The company's financial year ends March 31.

"We are living in tough times," Wipro's chairman Azim Premji said in a statement. "However, recessions do not last, resilient companies do."

Revenue from information technology services, which accounted for 95 percent of the company's operating income, was $1.1 billion, a quarterly decline of 0.9 percent.

Premji said revenues from IT services this quarter should be around $1.045 billion–or 5 percent less than last quarter's revenues in dollar terms.

That guidance includes income from Citi Technology Services Ltd., Citigroup Inc.'s in-house IT services provider in India, which Wipro acquired in December for $127 million.

When Wipro acquired the unit, it said 2008 revenues from Citi Technology Services would be about $80 million.

"The results were not in line with our expectations and the guidance they've given is not very encouraging," said Dipen Shah, an analyst at Mumbai's Kotak Securities.

The economic downturn, especially in the United States, which fuels the Indian outsourcing sector, has frozen corporate decision-making, analysts say.

"We are seeing a significant amount of uncertainty with plans," Shah said. "The velocity of business flow is reducing. That's impacting profit margins of Indian IT companies. We need to see more stability in the U.S. economy."